A Joplin firefighter who serves on the board of trustees for the Police and Firemen's Pension Fund at a meeting Thursday accused the city of Joplin's finance director of leading an attack on the pension plan and asked that she be replaced with outside administrators.
"It's been proposed that the city wants to change our pension plan to something else," said fireman John Alford, one of two Joplin Fire Department representatives on the board. "I find it difficult to stomach some of this because it is our plan administrator that is leading the attack on our pension plan."
His target is Finance Director Leslie Haase. He asked the board at its meeting to consider hiring an outside plan administrator and to terminate Haase's role, which largely involves overseeing the fund's payments and services to beneficiaries, and arranging for professional services to the board.
City Attorney Peter Edwards clarified that the board is the plan administrator, not the finance director.
"Correct," Alford replied. "And out of convenience the past couple of years, we've had Miss Leslie over here, the city finance director, doing the job for us. She does administrate the plan. If anybody needs to contact anybody, they call her."
He told the board there would be certain advantages to hiring an outside plan administrator. One of those would be having someone who could advise and act as advocate for the board rather than receiving information and recommendations from a city employee.
"It takes some of the city bias off this board that we have right now," Alford said. "Personally I don't see how she could not be biased. She's the one leading the attack against the plan. And it's my fiduciary responsibility as a board member that the plan be looked at better than it is right now."
The city attorney asked Haase to explain her responsibilities. "What you do seems to come from your role as finance director, the person in charge of payroll, so it may help the board to understand that if they did hire a third-party administrator, what continuing duties would you continue to have?"
Haase said she would continue to put together the fund's financial statements, her office calculates the payroll and the withholdings to the fund as well as the payouts to beneficiaries. The pension plan runs through the city books, which would continue in her department. "The finance director, not me personally, will always have a role in this pension plan," Haase said.
Alford said he knew the finance director would always be involved, "but there needs to be a separation of duties. There needs to be a pension plan administrator and a finance director. That's the whole purpose of a third-party administrator."
An outside administrator could bring ideas to the board on its obligations and take over the duties of dealing with financial consultants and make sure that "we get some of the stuff on time," such as information about a fund custodian, which he said is a year late now.
Another firefighter on the board, Adam Grimes, said the board can decide what duties it would ask an administrator to perform, including advisory functions. He said the plan has an issue with its funding ratio and that he would like an expert to give the board direction on strategies for that.
Grimes said that while the timing of the move may seem retaliatory for the city budget options Haase presented, which included proposals for certain funding cuts within police and fire departments, firefighters have been asking him and Alford for years to get someone else to advise the board.
The board currently retains a fund actuary who meets with the board annually to update them on the status of the fund's investments, the market, and the needed adjustments to fund investments and contributions. Also, two members of the board who represent the community are finance professionals — Marshall Hogue, a financial adviser with Edward Jones, and Mike McGavaran, a financial adviser with Raymond James.
Alford said that when he came into the pension fund, it had a balance of about $18 million that has now grown to about $41 million. "It's time to get some advice on how to maintain that. And when the pension plan is attacked in public, it's time to have somebody on our side," he said.
The option to change to a state retirement fund, if the council decided to pursue such, would require maintaining the fund and providing a funding source to take care of the unfunded balance for its future obligations. It would not cause current firefighters or police officers to lose retirement funding.
Hogue said that with the pension plan being in the public eye and because of the unfunded obligations, the board might want to hear what some professional administrators say they could do.
Sgt. Jared Delzell, a police department representative on the board, said police officers have not discussed the idea to the same extent as firefighters, but it would not hurt to hear some other ideas. "I have some questions, some concerns about it, but I see some benefits as well," he said.
Capt. Larry Swinehart, also a board representative for the police department, said he has concerns about the cost of hiring an outside administrator and "as we look at the possibility of moving to LAGERS (the state fund), I'm wondering if we as a board will need some outside legal advice and an outside adviser versus a plan administrator" to do the best job as fiduciaries of the fund.
"This board has done an outstanding job," Swinehart said. "In 2008 this old pension took a big old hard hit, and I was very concerned. And we're up now to $41 million, so we're not doing too bad, not doing too bad at all. But I think we would be wiser to be looking for an adviser versus a third-party administrator."
Mayor Gary Shaw told the board that "Leslie is not attacking the fund. She works for the city manager and the council gave the city manager a direction that we wanted to see what we could do to get our finances in order and this is one of the things that she showed us. So I don't feel it is fair to say she is attacking the fund. She is just showing some of the things we could consider" and council does not have to adopt all of those options.
Grimes said the board has had outside advisers and attorneys from time to time for specific purposes.
He made a motion to gather information about third-party administrators, and the board approved the motion.
After the meeting adjourned, the mayor told the board, "Remember we are a team."
Alford replied, "It doesn't seem that way."
The mayor responded, "We can't settle our differences on social media," referring to Facebook posts made by the unions representing the public safety workers who are seeking pay raises. "Remember we're a team."
Haase on June 4 outlined about 30 options for consideration by the City Council as a way of trimming budget costs and making the city's general fund more sustainable.
One option would be to move newer police and fire employees from the Police and Firemen’s Pension Fund to a state retirement fund for public employees. It would reduce the amount of money the city is spending to provide pension benefits. Pension costs could be reduced by more than $1 million, according to the finance director's report.
The council asked that more research on the costs be provided but has not yet made decisions on the pension question and some of the other key sustainability options. At the heart of the discussion is a way to make room in the budget for city worker raises. Police and firefighters say that lower than average wages for public safety workers is causing turnover, leaving them shorthanded.